Working with Rivals: The Impact of Competitor Alliances on Financial Performance
Journal of Marketing Research, 44 (1), 73-83, 2007
12 Pages Posted: 5 May 2013
Date Written: 2007
To survive and prosper in today’s highly competitive environment, firms are increasingly engaging in cooperative alliances with their rivals. However, the impact of these competitor alliances on financial performance is largely unknown. This research examines this issue. Using both survey and archival data, the authors conduct two studies that reveal that the intensity of a firm’s alliances with its competitors has a curvilinear (inverted U-shaped) influence on return on equity. In addition, the authors find that a firm’s competitor orientation, as embodied in its strategies and objectives, can strengthen or weaken this curvilinear effect. Overall, these findings indicate that both competition and cooperation have dark sides that a firm must carefully manage when working with rivals.
JEL Classification: M21, M31, G00, G12, L86, M00, M30, M14
Suggested Citation: Suggested Citation